Sunedison (SUNEQ) 10-Q/A 2005 Q2 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

Or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission File Number: 001-13828

MEMC ELECTRONIC MATERIALS, INC.

(Exact name of registrant as specified in its charter)

Delaware	56-1505767
(State or other jurisdiction of incorporation or organization)	(I. R. S. Employer Identification No.)
501 Pearl Drive (City of O’Fallon) St. Peters, Missouri	63376
(Address of principal executive offices)	(Zip Code)

(636) 474-5000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ¨  Yes    x  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See the definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares of the registrant’s common stock outstanding at July 29, 2005 was 209,400,054.

This Form 10-Q/A is being filed for the purpose of amending and restating Item 1 Financial Statements of Part I, containing our unaudited consolidated financial statements and related notes as of and for the three and six month periods ended June 30, 2005. See Note 2 to the unaudited consolidated financial statements for further discussion of the restatement and related disclosures. We also have amended Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations of Part I to give effect to the restatement. In addition, we have amended Item 4 Controls and Procedures of Part I and Item 6 Exhibits of Part II to reflect the filing of current certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and current certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. This Form 10-Q/A does not attempt to modify or update any other disclosures set forth in the original filing, except as required to reflect the effects of the restatement. Additionally, this Form 10-Q/A does not purport to provide a general update or discussion of any other developments at the company subsequent to the original filing.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; Dollars in thousands, except share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
	(As restated, see Note 2)						(As restated, see Note 2)
Net sales	$	272,256		$	255,539		$	523,195		$	484,299
Cost of goods sold		182,952			168,380			352,616			323,797
Gross margin		89,304			87,159			170,579			160,502
Operating expenses:
Marketing and administration		18,794			17,842			36,870			35,030
Research and development		8,529			9,268			17,643			18,181
Operating income		61,981			60,049			116,066			107,291
Nonoperating expense:
Interest expense		1,937			3,557			3,848			6,876
Interest income		(991	)		(1,464	)		(1,702	)		(3,013	)
Currency losses		836			7,470			759			1,106
Other, net		(515	)		(489	)		(835	)		(2,387	)
Total nonoperating (income) expense		1,267			9,074			2,070			2,582
Income before income taxes, equity in loss of joint venture and minority interests		60,714			50,975			113,996			104,709
Income tax provision (benefit)		18,350			(12,581	)		14,512			853
Income before equity in loss of joint venture and minority interests		42,364			63,556			99,484			103,856
Equity in loss of joint venture		—			—			—			(1,717	)
Minority interests		(1,887	)		(2,955	)		(1,969	)		(5,632	)
Net income	$	40,477		$	60,601		$	97,515		$	96,507
Basic income per share	$	0.19		$	0.29		$	0.47		$	0.47
Diluted income per share	$	0.18		$	0.27		$	0.43		$	0.44
Weighted average shares used in computing basic income per share		209,206,270			207,728,191			209,017,410			207,460,241
Weighted average shares used in computing diluted income per share		224,681,998			220,953,006			224,321,328			221,061,904

See accompanying notes to consolidated financial statements.

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MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

	June 30, 2005			December 31, 2004
	(Unaudited) (As restated, see Note 2)
ASSETS
Current assets:
Cash and cash equivalents	$	64,993		$	49,519
Short term investments		36,004			42,795
Accounts receivable, less allowance for doubtful accounts of $1,457 and $1,633 in 2005 and 2004, respectively		146,616			158,975
Inventories		129,680			127,564
Prepaid and other current assets		26,860			29,724
Total current assets		404,153			408,577
Property, plant and equipment, net of accumulated depreciation of $211,843 and $198,595 in 2005 and 2004, respectively		495,522			444,670
Deferred tax assets, net		112,689			119,835
Other assets		53,338			55,107
Total assets	$	1,065,702		$	1,028,189
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	41,346		$	42,646
Accounts payable		104,987			124,083
Accrued liabilities		43,766			57,425
Deferred revenue		7,606			—
Accrued wages and salaries		27,137			19,117
Income taxes payable		30,200			10,282
Total current liabilities		255,042			253,553
Long-term debt, less current portion		108,229			116,082
Pension and post-employment liabilities		92,572			96,745
Other liabilities		34,213			72,432
Total liabilities		490,056			538,812
Minority interests		40,785			46,479
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value, 50,000,000 shares authorized, none issued and outstanding at 2005 and 2004		—			—
Common stock, $.01 par value, 300,000,000 shares authorized, 210,037,271 and 209,108,105 issued at 2005 and 2004, respectively		2,101			2,091
Additional paid-in capital		159,576			154,736
Retained earnings		405,866			308,351
Accumulated other comprehensive loss		(28,562	)		(17,389	)
Deferred compensation		(492	)		(1,263	)
Treasury stock, 714,205 shares in 2005 and 2004		(3,628	)		(3,628	)
Total stockholders’ equity		534,861			442,898
Total liabilities and stockholders’ equity	$	1,065,702		$	1,028,189

See accompanying notes to consolidated financial statements.

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MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; Dollars in thousands)

	Six Months Ended June 30,
	2005			2004
	(As restated, see Note 2)			(As restated, see Note 2)
Cash flows from operating activities:
Net income	$	97,515		$	96,507
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		26,639			20,165
Interest accretion		—			2,326
Minority interests		1,969			5,632
Equity in income (loss) of joint venture		—			1,717
Stock compensation		499			1,260
Working capital and other		7,072			(22,763	)
Net cash provided by operating activities		133,694			104,844
Cash flows from investing activities:
Proceeds from sale of time deposits		19,088			23,911
Purchases of time deposits		(20,108	)		(8,529	)
Capital expenditures		(110,577	)		(71,770	)
Purchase of business, net of cash acquired		—			(57,226	)
Proceeds from sale of property, plant and equipment		4			18
Net cash used in investing activities		(111,593	)		(113,596	)
Cash flows from financing activities:
Net short-term borrowings		(1,148	)		(26,858	)
Proceeds from issuance of long-term debt		—			60,014
Principal payments on long-term debt		(4,444	)		(4,823	)
Proceeds from issuance of common stock		5,121			2,383
Dividend to minority interest		(9,546	)		(4,765	)
Net cash provided by (used in ) financing activities		(10,017	)		25,951
Effect of exchange rate changes on cash and cash equivalents		3,390			(239	)
Net increase in cash and cash equivalents		15,474			16,960
Cash and cash equivalents at beginning of period		49,519			54,894
Cash and cash equivalents at end of period	$	64,993		$	71,854
Supplemental schedule of non-cash investing and financing activities:
Accounts payable incurred (relieved) for acquisition of fixed assets	$	(5,877	)	$	755

See accompanying notes to consolidated financial statements.

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MEMC ELECTRONIC MATERIALS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share data)

(1)Nature of Operations

We are a leading worldwide producer of wafers for the semiconductor industry. We operate manufacturing facilities in every major semiconductor manufacturing region throughout the world, including Europe, Japan, Malaysia, South Korea, Taiwan and the United States. Our customers include virtually all of the major semiconductor device manufacturers in the world. We provide wafers in sizes ranging from 100 millimeters (4 inch) to 300 millimeters (12 inch) and in three general categories: prime polished, epitaxial and test/monitor. A prime polished wafer is a highly refined, pure wafer with an ultra-flat and ultra-clean surface. An epitaxial wafer consists of a thin, silicon layer grown on the polished surface of the wafer. A test/monitor wafer is substantially the same as a prime polished wafer, but with some less rigorous specifications.

(2)Restatement of Consolidated Financial Statements and Prior Period Adjustments

On October 26, 2005, the Audit Committee of the Board of Directors determined that the first two quarters of 2005 should be restated. Accordingly, all notes to the consolidated financial statements except notes 1, 5 and 12 have been restated, and notes 2 and 3 have been added. The company has identified several errors and as a result of correcting these errors, the company’s consolidated net income decreased by $18,436 and $38,556, for the three and six months ended June 30, 2005, respectively. The adjustments are grouped into the following categories:

	Three Months Ended June 30, 2005			Six Months Ended June 30, 2005
A. Tax Adjustments	$	(7,085	)	$	(17,547	)
B. Sales Bill and Hold		(1,209	)		(1,919	)
C. Sales with Current and Longer Term Deliveries		(2,261	)		(5,990	)
D. Supplemental Executive Pension Plan		—			1,327
E. Property, Plant and Equipment		(425	)		(1,670	)
F. Insurance Recovery		—			(1,386	)
G. Intercompany Profit Elimination		(516	)		(4,699	)
H. Government Grant		(2,212	)		(2,512	)
I. Retiree Welfare Benefit Plan		(687	)		(1,374	)
L. Other Accounting Corrections		(1,428	)		2,006
M. Tax Impact Related to Adjusting Entries		(2,613	)		(4,792	)
Total	$	(18,436	)	$	(38,556	)

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A.Tax Adjustments. Corrections to the income tax provision included a change in the effective rate for the six months ended June 30, 2005 of $10,464 and changes in discrete items of $7,083, as discussed below, for a total of $17,457.

• A tax benefit of $29,618 due to a change in estimate of allowable depreciation deductions and the election to credit foreign taxes instead of deducting foreign taxes. Previously, a tax benefit of $6,165 was included in the company’s annual effective rate. In 2005, third-party valuations were received that supported revised estimates of the fair value of certain assets which in turn supported additional depreciation deductions.

• Tax expense of $20,105 related to the deductibility of certain interest payments. As originally reported in the Form 10-Q for the first quarter of 2005, the company previously recognized a benefit of $26,583 in its provision related to a deduction for which it had previously established a reserve in the fourth quarter of 2004. The reserve was established for the potential non-deductiblity of a $67,700 payment to an investor group led by TPG in connection with the redemption of the company’s senior subordinated secured notes. In the first quarter of 2005, the company obtained opinions from outside tax advisors indicating that the redemption payment should be deductible and in the 2005 first quarter report on Form 10-Q reversed the tax reserve that had been established. Upon further review and analysis, the company has now determined that $20,105 of the total amount should not have been reversed in the first quarter, thereby reducing the benefit reported for the quarter. There was no additional impact in the second quarter related to this item.

• Tax expense of $6,024 related to tax benefits for deductions for stock options that should have been recorded to equity in prior years. There was no additional impact in the second quarter.

• Tax expense of $7,418 for prior periods and $661 for each of the first and second quarters of 2005 related to the U.S. generally accepted accounting principles (US GAAP) treatment of fixed asset basis under the Korea Asset Revaluation Law. In 2000, the company took advantage of the Korea Revaluation Law allowing it to increase the tax basis in fixed assets in exchange for a one-time payment. Since 2000, the company has reflected a permanent deduction for the increased depreciation for tax purposes. Upon further review, the company determined that a deferred tax asset should have been recorded related to the increase in tax basis.

• Other tax expense of $1,832 ($937 for prior period adjustments related to amended tax return filings and reassessment of tax basis limited by the change in control provisions under IRC Sec. 382 and $895 for other items.) There was no additional impact in the second quarter.

B.Sales Bill and Hold.Corrections to net sales and cost of goods sold included deliveries that did not meet the revenue recognition criteria for bill and hold transactions. The corrections for these transactions are decreases of $385 and $1,209 to net sales and gross margin, respectively, and an increase to cost of goods sold of $823 for the three months ended June 30, 2005. For the six months ended June 30, 2005, the adjustments for these transactions are decreases to net sales, cost of goods sold and gross margin of $3,590, $1,671 and $1,919, respectively.

C.Sales with Current and Longer Term Deliveries. Corrections related to the revenue recognized on deliveries were made for sales agreements entered into for current and longer term deliveries of polysilicon at multiple prices based on the delivery date and where prices at the contract date were not fixed and determinable. For both types of arrangements, the revenue for the deliveries in the current quarter was originally recognized at the stated price per the agreement. Revenue recognized on deliveries associated with multiple prices should have been recorded at fair value, which has been determined to be the average price per unit for the total arrangement. For agreements where contract prices were not fixed and determinable at the time of delivery, the revenue for the deliveries should have been deferred until terms of the contract were finalized. Cash received in excess of fair value or prior to contract finalization of $7,606 has been deferred. The correction for these transactions to net sales, cost of goods sold and gross margin

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are decreases of $2,743, $482 and $2,261, respectively for the three months ended June 30, 2005. For the six months ended June 30, 2006, the adjustments for these transactions are decreases to net sales, cost of goods sold and gross margin of $7,606, $1,616 and $5,990, respectively.

D.Supplemental Executive Pension Plan.Amounts previously recorded as cost of goods sold and marketing and administration expenses in connection with the company’s supplemental executive pension plan have been corrected for a data error in the estimated liability calculation. This adjustment decreased cost of goods sold and marketing and administration expenses by $939 and $388, respectively, for the three months ended March 31, 2005.

E.Property, Plant and Equipment.A correction was made to depreciation expense related to certain assets for which a salvage value had been estimated, but not properly supported. For the three months ended June 30, 2005, this adjustment resulted in a increase to cost of goods sold and a decrease to gross margin of $421 and marketing and administrative expenses of $4, with the offset to accumulated depreciation. For the six months ended June 30, 2005, this adjustment resulted in a decrease to cost of goods sold and an increase to gross margin of $1,649 and marketing and administrative expenses of $21, with the offset to accumulated depreciation.

F.Insurance Recovery.In December 2004, the company’s Novara, Italy plant experienced a minor fire. As a result, the company incurred losses from business interruption in the first quarter of 2005. In March 2005, the company recorded an insurance recovery receivable related to business interruption of $1,386 that was recorded as a reduction of cost of goods sold. The company should not have recorded this receivable until the claim had been settled and therefore has increased cost of goods sold $1,386 with the offset to prepaid and other current assets as of March 31, 2005.

G.Intercompany Profit Elimination.A correction was made of amounts improperly included in inventory related to intercompany profit on raw materials and goods in process. This correction resulted in an increase to cost of goods sold of $516 and $4,699, with a corresponding reduction to inventory, for the three and six months ended June 30, 2005, respectively.

H.Government Grant.In anticipation of a Department of Defense contract the company received in the second quarter of 2005 related to the development of thin film silicon on insulator (SOI) wafers utilizing silicon layer transfer technology, the company recognized a grant receivable of $300 as an offset to research and development expenses during the three months ended March 31, 2005. The subsequent contract provides for the government to reimburse the company $3,514 of the total costs to be incurred of $12,069. The total contract value of $12,069 represents the proposed development costs expected to be incurred by the company during the nine month period from April 1 through December 31, 2005. The company has now determined that the grant should be recorded on a proportionate cost basis. This correction increased research and development expenses $2,212 and $2,512, with the offset to prepaid and other current assets, for the three and six months ended June 30, 2005, respectively.

I.Retiree Welfare Benefit Plan. MEMC changed its administration and actuarial valuation of its retiree benefit plans in 2005 relating to the basis of calculation of defined dollar limits. Based on further review, it was determined that the accounting was not appropriate and MEMC adjusted its accounting in 2005 to reflect a revised FAS 106 net periodic cost. This correction resulted in an increase to cost of goods sold and marketing and administrative expenses of $488 and $199, respectively, for the three months ended June 30, 2005. For the six months ended June 30, 2005, the correction resulted in an increase to cost of goods sold and marketing and administrative expenses of $975 and $398, respectively.

J.Research and Development – Cost of Goods Sold Reclassification. MEMC had reclassified research and development (R&D) costs for the purpose of identifying R&D costs within manufacturing. MEMC determined that the difficulty of precisely measuring the impact of these actual costs warranted a change of the classification. The correction for this reversal was a decrease to R&D expense and an increase to cost of goods sold of $4,691 and $7,274 for the three and six months ended June 30, 2005, respectively.

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K.Factoring of Accounts Receivable. As discussed further in Note 9, in December 2004, the company entered into an agreement to factor accounts receivable for which the agreement did not meet all of the criteria under SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” to qualify as a sale of receivables. As such, the proceeds received from these factored receivables are now considered debt. Both accounts receivable and short term borrowings were increased by $17,271 at June 30, 2005.

L.Other Accounting Corrections.As part of the restatement, other corrections were made, none of which was individually significant. The impact of these adjustments for the three months ended June 30, 2005 was to increase cost of goods sold $1,541, marketing and administrative expenses $247, accrued liabilities $247 and other comprehensive loss $91, and to decrease sales $3, other expense $231, minority interest $132, accounts receivable $322, inventory $1,182, property, plant and equipment $550 and accounts payable $322. For the six months ended June 30, 2005, the impact of these adjustments was to increase sales $1,150, cost of goods sold $1,320, marketing and administrative expenses $346, other expense $97, accounts payable $423, accrued liabilities $709 and accumulated other comprehensive loss $227, and to decrease currency loss $808, minority interest $1,811, accounts receivable $322, inventory $974, property, plant and equipment $931 and prepaid and other current assets $195. At March 31, 2005, the company reclassified $19,682 from pension and post-employment liabilities to accrued liabilities for estimated contributions to be paid within twelve months of the balance sheet date.

M.Tax Impact Related to Adjusting Entries. As a result of the corrections above, the company recorded a reduction in the income tax benefit of $2,613 and $4,792 for the three and six months ended June 30, 2005, respectively.

The company determined that the consolidated statements of cash flows for the six months ended June 30, 2005 and 2004 should be restated to properly reflect transactions that were incorrectly classified as operating cash flows by the company. These transactions included the following:

• The company incorrectly recorded non-cash activities related to the financing and payment of fixed asset purchases in operating activities of $5,877 and $755 in the six months ended June 30, 2005 and 2004, respectively.

• For the six months ended June 30, 2005 and 2004, the company incorrectly excluded proceeds from the sale of time deposits with original maturities exceeding three months of $19,088 and $23,911, respectively, from investing activities. For the six months ended June 30, 2005 and 2004, the company incorrectly excluded purchases of time deposits with original maturities exceeding three months of $20,108 and $8,529, respectively, from investing activities.

• The company incorrectly classified trading securities as cash and cash equivalents and as a result, the change in short-term investments of $8,651 and $24,257 was not properly recorded in operating activities for the six months ended June 30, 2005 and 2004, respectively. This reclassification reduced the effect of exchange rate changes on cash and cash equivalents by $839 and $1,592 for the six months ended June 30, 2005 and 2004, respectively.

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The following table sets forth the consolidated statement of operations for the company, showing previously reported and restated amounts, for the three and six months ended June 30, 2005 (unaudited, in thousands, except per share data):

	Three Months Ended June 30, 2005							Six Months Ended June 30, 2005
	As previously reported				As restated			As previously reported			As restated
Net sales	$	275,388			$	272,256		$	533,242		$	523,195
Cost of goods sold		174,956				182,952			339,533			352,616
Gross margin		100,432				89,304			193,709			170,579
Operating expenses:
Marketing and administration		18,344				18,794			36,497			36,870
Research and development		11,008				8,529			22,405			17,643
Operating income		71,080				61,981			134,807			116,066
Nonoperating (income) expense:
Interest expense		1,937				1,937			3,848			3,848
Interest income		(991	)	��		(991	)		(1,702	)		(1,702	)
Currency losses		835				836			1,566			759
Other, net		(285	)			(515	)		(932	)		(835	)
Total nonoperating expense		1,496				1,267			2,780			2,070
Income before income taxes, equity in loss of joint venture and minority interests		69,584				60,714			132,027			113,996
Income tax (benefit) provision		8,652				18,350			(7,827	)		14,512
Income before equity in loss of joint venture and minority interests		60,932				42,364			139,854			99,484
Equity in loss of joint venture		—				—			—			—
Minority interests		(2,019	)			(1,887	)		(3,783	)		(1,969	)
Net income	$	58,913			$	40,477		$	136,071		$	97,515
Basic income per share	$	0.28			$	0.19		$	0.65		$	0.47
Diluted income per share	$	0.26			$	0.18		$	0.61		$	0.43
Weighted average shares used in computing basic income per share		209,206,270				209,206,270			209,017,410			209,017,410
Weighted average shares used in computing diluted income per share		224,681,998				224,681,998			224,321,328			224,321,328

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The following table sets forth the consolidated balance sheet for the company, showing previously reported and restated amounts, as of June 30, 2005 (unaudited, in thousands):

	As previously reported			As restated
ASSETS
Current assets:
Cash and cash equivalents	$	100,997		$	64,993
Short term investments		—			36,004
Accounts receivable, net		132,107			146,616
Inventories		134,851			129,680
Prepaid and other current assets		27,257			26,860
Total current assets		395,212			404,153
Property, plant and equipment, net		503,861			495,522
Deferred tax assets, net		127,134			112,689
Other assets		53,338			53,338
Total assets	$	1,079,545		$	1,065,702
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	21,709			41,346
Accounts payable		104,578			104,987
Accrued liabilities		23,875			43,766
Deferred revenue		—			7,606	��
Accrued wages and salaries		23,122			27,137
Income taxes payable		25,629			30,200
Total current liabilities		198,913			255,042
Long-term debt, less current portion		108,229			108,229
Pension and post-employment liabilities		113,204			92,572
Other liabilities		45,348			34,213
Total liabilities		465,694			490,056
Minority interests		50,262			40,785
Commitments and contingencies
Stockholders’ equity:
Preferred stock
Common stock		2,101			2,101
Additional paid-in capital		159,576			159,576
Retained earnings		434,876			405,866
Accumulated other comprehensive loss		(28,844	)		(28,562	)
Deferred compensation		(492	)		(492	)
Treasury stock		(3,628	)		(3,628	)
Total stockholders’ equity		563,589			534,861
Total liabilities and stockholders’ equity	$	1,079,545		$	1,065,702

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The following presents the impact of the restatement on the condensed consolidated statements of cash flows for the company, showing previously reported and restated amounts, for the six months ended June 30, 2005 and 2004 (unaudited, in thousands):

	Six Months Ended June 30, 2005						Six Months Ended June 30, 2004
	As previously reported			As restated			As previously reported			As restated
Cash flows from operating activities:
Net income	$	136,071		$	97,515		$	96,507		$	96,507
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		27,702			26,639			20,165			20,165
Interest accretion		—			—			2,326			2,326
Minority interests		3,783			1,969			5,632			5,632
Equity in income (loss) of joint venture		—			—			1,717			1,717
Stock compensation		603			499			1,260			1,260
Working capital and other		(48,948	)		7,072			2,249			(22,763	)
Net cash provided by operating activities		119,211			133,694			129,856			104,844
Cash flows from investing activities:
Proceeds from sale of time deposits		—			19,088			—			23,911
Purchases of time deposits		—			(20,108	)		—			(8,529	)
Capital expenditures		(105,630	)		(110,577	)		(72,525	)		(71,770	)
Purchase of business, net of cash acquired		—			—			(57,226	)		(57,226	)
Proceeds from sale of property, plant and equipment		—			4			18			18
Net cash used in investing activities		(105,630	)		(111,593	)		(129,733	)		(113,596	)
Cash flows from financing activities:
Net short-term borrowings		(172	)		(1,148	)		(26,858	)		(26,858	)
Proceeds from issuance of long-term debt		—			—			60,014			60,014
Principal payments on long-term debt		(4,444	)		(4,444	)		(4,823	)		(4,823	)
Proceeds from issuance of common stock		5,121			5,121			2,383			2,383
Dividend to minority interest		(9,546	)		(9,546	)		(4,765	)		(4,765	)
Net cash provided by (used in) financing activities		(9,041	)		(10,017	)		25,951			25,951
Effect of exchange rate changes on cash and cash equivalents		4,143			3,390			1,353			(239	)
Net increase in cash and cash equivalents		8,683			15,474			27,427			16,960
Cash and cash equivalents at beginning of period		92,314			49,519			96,859			54,894
Cash and cash equivalents at end of period	$	100,997		$	64,993		$	124,286		$	71,854
Supplemental schedule of non-cash investing and financing activities:
Accounts payable incurred (relieved) for acquisition of fixed assets	$	—		$	(5,877	)	$	—		$	755

Page 12

Certain amounts were recorded in the first six months of 2005 which related to previous periods. The amount of such adjustments was not material to the company’s consolidated results of operations for 2004 and prior periods, nor is the inclusion of the net expense in the results of operations for the six months ended June 30, 2005 considered material. The effect of these adjustments on gross margin and net income is as follows:

Prior Period Adjustments – increase (decrease)	Impact on Gross Margin			Impact on Net Income
Dollars in thousands
Income Taxes, net	$	2,358		$	(3,251	)
Revenue Recognition		(1,098	)		(696	)
Other		(3,561	)		(2,225	)
Total	$	(2,301	)	$	(6,172	)

Included in the Income Taxes, net impact on net income were prior period adjustments, including a benefit of $6,478 related to the portion of the interest on senior subordinated notes deductible for tax purposes for which a liability had been recorded, additional expense of $2,768 (tax expense of $7,418 offset by less depreciation expense and other adjustments) related to the US GAAP treatment of fixed asset basis under the Korea Asset Revaluation Law, and additional expense of $6,024 associated with non-qualified stock option deductions which had been recorded as a reduction to income tax expense in prior periods, and additional expense of $937 related to amended tax filings and reassessment of tax basis limitations.

The Revenue Recognition adjustment consisted of the deferral of shipments to one customer in 2004 for which the contract pricing was not fixed and determinable at the time of delivery and resulted in decreases of $1,098 and $696 to gross margin and net income, respectively, for the six month period.

Included in Other are primarily adjustments to cost of goods sold and inventory of approximately $2,400 for profit not previously eliminated from inventory for product shipped between operations and other adjustments that are not individually significant.

(3)Reclassifications

Certain December 31, 2004 balance sheet amounts have been reclassified to conform with the current period presentation including 1) $42,795 from cash and cash equivalents to short-term investments, 2) increase in accounts receivable and short-term borrowings of $18,247 and 3) $19,682 from pension and post-employment liabilities to accrued liabilities.

(4)Significant Accounting Policies

Revenue Recognition

We record revenue for product sales when title transfers, the risks and rewards of ownership have been transferred to the customer, the fee is fixed and determinable and collection of the related receivable is reasonably assured, which is generally at the time of shipment for non-consignment orders. In the case of consignment orders, we recognize revenue based upon customer usage, defined as when the customer pulls the product from consignment inventory. Our wafers are generally made to

Page 13

customer specifications and we conduct rigorous quality control and testing procedures to ensure that the finished wafers meet the customer’s specifications before the product is shipped. We consider international shipping term definitions in our determination of when title passes. We defer revenue for multiple element arrangements based on a fair value per unit for the total arrangement when we receive cash in excess of fair value. We also defer revenue when pricing is not fixed and determinable or other revenue recognition criteria is not met.

Stock-Based Compensation

We account for our stock-based compensation under Accounting Principles Board Opinion No. 25 (Opinion 25), “Accounting for Stock Issued to Employees,” and related interpretations. We record compensation expense related to restricted stock units over the vesting periods of the awards and reflect the unearned portion of deferred compensation as a separate component of stockholders’ equity.

No compensation cost has been recognized for non-qualified stock options granted under the plans when the exercise price of the stock options equals the market price on the date of grant. Compensation expense equal to the intrinsic value of the options has been recognized over the vesting periods for options granted at a price below market price on the grant date and deferred compensation has been recorded for the unearned portion of the options as a separate component of stockholders’ equity. Had compensation cost been determined for our non-qualified stock options based on the fair value at the grant dates consistent with the alternative method set forth under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation,” we would have reported the amounts indicated below:

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
	(As restated, see Note 2)						(As restated, see Note 2
Net income as reported	$	40,477		$	60,601		$	97,515		$	96,507
Add:
Stock-based employee compensation included in reported net income, net of related tax effects		144			336			384			781
Deduct:
Total stock-based compensation expense determined under the fair value based method for all awards, net of related tax effects		(2,249	)		(2,538	)		(4,371	)		(5,105	)
Pro forma net income	$	38,372		$	58,399		$	93,528		$	92,183
Income per share:
Basic—as reported	$	0.19		$	0.29		$	0.47		$	0.47
Diluted—as reported	$	0.18		$	0.27		$	0.43		$	0.44
Basic—pro forma	$	0.18		$	0.28		$	0.45		$	0.44
Diluted—pro forma	$	0.17		$	0.26		$	0.42		$	0.42

Page 14

During 2005, MEMC discovered errors in its volatility calculations in 2004 due to incorrect market values used in the calculation. In addition, MEMC had improperly excluded certain prior periods in its volatility calculations in 2005. The correction for these revisions increased the total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects, by approximately $235 and $73 for the three and six months ended June 30, 2005, respectively. For the three and six months ended June 30, 2004, the correction for these revisions decreased the total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects, by approximately $883 and $1,913, respectively.

(5)Basis of Presentation

The accompanying unaudited consolidated financial statements of MEMC Electronic Materials, Inc. and subsidiaries (MEMC), in our opinion, include all adjustments (consisting of normal, recurring items) necessary to present fairly MEMC’s financial position and results of operations and cash flows for the periods presented. We have presented the consolidated financial statements in accordance with the requirements of Regulation S-X and consequently do not include all disclosures required by U.S. generally accepted accounting principles. These unaudited consolidated financial statements should be read in conjunction with our annual report on Form 10-K for the fiscal year ended December 31, 2004, which contains MEMC’s audited financial statements for such year and the related management’s discussion and analysis of financial condition and results of operations. Operating results for the six month period ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

(6)Earnings per share

For the three month periods ended June 30, 2005 and 2004, basic and diluted earnings per share (EPS) were calculated as follows:

	Three Months Ended June 30, 2005				Three Months Ended June 30, 2004
	(As restated, see Note 2)
	Basic		Diluted		Basic		Diluted
EPS numerator:
Net income	$	40,477	$	40,477	$	60,601	$	60,601
EPS denominator:
Weighted average shares outstanding		209,186,270		209,186,270		207,728,191		207,728,191
Warrants		—		12,956,257		—		11,124,720
Stock options		—		2,486,807		—		2,100,095
Restricted stock units		20,000		52,664		—		—
Total shares		209,206,270		224,681,998		207,728,191		220,953,006
Earnings per share	$	0.19	$	0.18	$	0.29	$	0.27
							��

Page 15

For the six month periods ended June 30, 2005 and 2004, basic and diluted earnings per share (EPS) were calculated as follows:

	Six Months Ended June 30, 2005				Six Months Ended June 30, 2004
	(As restated, see Note 2)
	Basic		Diluted		Basic		Diluted
EPS numerator:
Net income	$	97,515	$	97,515	$	96,507	$	96,507
EPS denominator:
Weighted average shares outstanding		208,997,410		208,997,410		207,460,241		207,460,241
Warrants		—		12,836,922		—		11,342,477
Stock options		—		2,434,209		—		2,259,186
Restricted stock units		20,000		52,787		—		—
Total shares		209,017,410		224,321,328		207,460,241		221,061,904
Earnings per share	$	0.47	$	0.43	$	0.47	$	0.44

At June 30, 2005, MEMC had outstanding 9,610,076 options and 16,666,667 warrants. For the three months ended June 30, 2005 and 2004, options to purchase 298,652 and 3,613,540 shares, respectively, of MEMC stock were excluded from the calculation of diluted EPS because the effect was antidilutive. For the six months ended June 30, 2005 and 2004, options to purchase 336,853 and 3,312,777 shares, respectively, of MEMC stock were excluded from the calculation of diluted EPS because the effect was antidilutive. Stock options are antidilutive when the exercise price of the options is greater than the average market price of the common shares for the period.

(7)Inventories

Inventories consist of the following:

	June 30, 2005		December 31, 2004
	(As restated, see Note 2)
Raw materials and supplies	$	15,936	$	20,307
Goods in process		52,904		54,160
Finished goods		60,840		53,097
	$	129,680	$	127,564

(8)Comprehensive Income

Comprehensive income for the three months ended June 30, 2005 and 2004 was $33,765 and $65,319, respectively. Comprehensive income for the six months ended June 30, 2005 and 2004 was $86,342 and $98,466, respectively. MEMC’s only adjustment from net income to comprehensive income was foreign currency translation adjustments in each period presented.

Page 16

(9)Debt

Our short-term borrowings totaled approximately $21,220 (includes factored receivables, as discussed below) at June 30, 2005, under approximately $100,571 of short-term loan agreements. Of the $100,571 committed short-term loan agreements, $3,260 is unavailable as it relates to the issuance of third party letters of credit.

The company and certain of its foreign subsidiaries have entered into agreements with various financial institutions whereby we sell on a continuous basis eligible trade accounts receivable. Each of the agreements has clauses covering recourse and non recourse. All of the receivables are sold on a recourse basis. These agreements have different terms, including options for renewal, none of which extend beyond one year. Such factoring is generally limited to $90,000 by our revolving credit agreement. The company accounts for its transfers of receivables as sales under SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (SFAS 140) if the criteria for sale treatment in SFAS 140 are met.

At June 30, 2005 and December 31, 2004, we had factored $52,108 and $51,584 of receivables, respectively, of which $17,271 and $18,247 have been recorded as short-term borrowings as of June 30, 2005 and December 31, 2004, respectively, as the sale criteria under SFAS 140 were not met for certain factored transactions.

Long-term borrowings outstanding were $128,355 at June 30, 2005, under $307,375 of long-term committed loan facilities. Of the $307,375 committed long-term loan agreements at June 30, 2005, $4,317 was unavailable as it related to the issuance of third party letters of credit.

On July 21, 2005, the company entered into a Revolving Credit Agreement with National City Bank of the Midwest, US Bank National Association, and such other lending institutions as may from time to time become lenders (the “National City Agreement”). The National City Agreement provides for a $200,000 secured revolving credit facility and replaces the $150,000 revolving credit facility from Citibank/UBS and the $35,000 revolving credit facility from Texas Pacific Group and certain of its affiliates (TPG).

The extinguishment of the Citibank/UBS and the TPG credit facilities will result in the write-off of approximately $1,900 of deferred financing fees. This loss will be recorded in nonoperating expenses for the three months ended September 30, 2005.

(10)Income Taxes

For the three months ended June 30, 2005, the company recorded a tax expense of $18,350 as compared to a benefit of $12,581 for the three months ended June 30, 2004. The expense recorded for the current quarter is reflective of a forecasted effective tax rate of 29% for 2005. The forecasted rate of 29% is exclusive of any discrete tax adjustments and without regard to future reversals of valuation allowances based on changes in judgment of projected future taxable income in the U.S. The rate is lower than the statutory rate primarily due to benefits derived from the company’s election to claim foreign tax credits, and the benefit associated with capturing other domestic tax credits.

For the six months ended June 30, 2005, the company recorded income tax expense of $14,512 as compared to $853 expense for the six months ended June 30, 2004. The expense is reflective of a forecasted rate of 29% for 2005, coupled with significant discrete tax adjustments impacting the tax provision in the first quarter. These included a tax benefit of $29,618 due to a change in estimate of allowable depreciation deductions and the company’s election to credit foreign taxes. Prior period adjustments included a decrease in tax reserves related to the deductibility of TPG interest expense in the amount of $6,478, a tax expense of $6,024 related to tax deductions for stock options exercised in prior years, a tax expense of $7,418 related to the US GAAP treatment of fixed asset basis under the Korea Asset Revaluation Law, and a tax expense of $937 for other adjustments related to amended return filings and a reassessment of the tax basis limited by the change in control provisions under IRC Section 382.

Page 17

(11) Benefit Plans

Net periodic postretirement benefit cost consists of the following:

	Three Months Ended June 30, 2005						Three Months Ended June 30, 2004					Six Months Ended June 30, 2005						Six Months Ended June 30, 2004
	(As restated, see Note 2)											(As restated, see Note 2)
	Pension Plans			Health Care Plan			Pension Plans			Health Care Plan		Pension Plans			Health Care Plan			Pension Plans			Health Care Plan
Service Cost	$	936		$	89		$	973		$	60	$	1,872		$	178		$	1,955		$	120
Interest Cost		2,321			621			2,265			743		4,642			1,242			4,534			1,486
Expected return on plan assets		(1,881	)		—			(1,493	)		—		(3,762	)		—			(2,933	)		—
Amortization of service costs		3			—			1			—		6			—			2			—
Net actuarial loss/(gain)		413			(139	)		239			—		826			(278	)		513			—
Transition obligation recognized		5			—			—			—		10			—			—			—
Net periodic postretirement benefit cost	$	1,797		$	571		$	1,985		$	803	$	3,594		$	1,142		$	4,071		$	1,606

In May 2004, the FASB issued FSP No. 106-2 (“FSP 106-2”), “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (the “Medicare Act”). The Medicare Act was enacted December 8, 2003. FSP 106-2 supersedes FSP 106-1, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003,” and provides authoritative guidance on accounting for the federal subsidy specified in the Medicare Act. The Medicare Act provides for a federal subsidy equal to 28% of certain prescription drug claims for sponsors of retiree health care plans with drug benefits that are at least actuarially equivalent to those to be offered under Medicare Part D, beginning in 2006. We have determined that our plan will qualify for a subsidy in 2006. As a result of the subsidy, net periodic postretirement benefit cost was reduced by $141 and $282 in the three and six months ended June 30, 2005, respectively, and the accumulated post-employment benefit obligation was decreased by $3,487 as of March 31, 2005.

(12)Commitments and Contingencies

Indemnification

We have agreed to indemnify some of our customers against claims of infringement of the intellectual property rights of others in our sales contracts with these customers. Historically, we have not paid any claims under these indemnification obligations and we do not have any pending indemnification claims.

Page 18

(13)Insurance Recovery

In December 2004, our Novara, Italy plant experienced a minor fire. In March 2005, we recorded an insurance recovery receivable of $2,014 that was recorded as a reduction of cost of goods sold.

(14)Government Grant

We received a contract with the Department of Defense in the second quarter of 2005 related to the development of thin film silicon on insulator (SOI) wafers utilizing silicon layer transfer technology. The total contract value was $12,069, representing the proposed development costs expected to be incurred by the company during the nine month period from April 1 through December 31, 2005. The contract provides for the government to reimburse the company $3,514 of the total costs to be incurred of $12,069 and is recognized on a proportionate cost basis. For the three and six months ended June 30, 2005, the company recognized $988 as an offset of actual SOI costs incurred within research and development expenses.

Page 19

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

As discussed in Note 2 to our consolidated financial statements included herein, we have restated our unaudited consolidated financial statements as of and for the three and six month periods ended June 30, 2005. All amounts included in this discussion and analysis reflect the effects of the restatement.

Overview.

The company showed improvement in operating results in the first six months of 2005 compared to the first six months of 2004, although we continued to experience pricing pressure from the lingering effects of the industry slowdown/inventory correction period.

On October 26, 2005, the Audit Committee of the Board of Directors determined that the first two quarters of 2005 should be restated. In addition, on August 7, 2006, the Audit Committee of the Board of Directors of the Company determined that the consolidated statements of cash flows for the first three quarters of 2004 and the year ended December 31, 2004 should be restated to properly reflect transactions that were incorrectly classified as operating cash flows. This report on Form 10-Q/A reflects the restatements, which are more fully discussed in Note 2 of Notes to Consolidated Financial Statements herein.

Certain amounts were recorded in the first six months of 2005 which related to previous periods. The amount of such adjustments was not material to the company’s consolidated results of operations for 2004 and prior periods, nor is the inclusion of the net expense in the results of operations for the six months ended June 30, 2005 considered material. The effect of these adjustments on gross margin and net income for the six months ended June 30, 2005 is as follows:

Prior Period Adjustments – increase (decrease)	Impact on Gross Margin			Impact on Net Income
Dollars in millions
Income Taxes, net	$	2.4		$	(3.3	)
Revenue Recognition		(1.1	)		(0.7	)
Other		(3.6	)		(2.2	)
Total	$	(2.3	)	$	(6.2	)

Included in the Income Taxes, net impact on net income were prior period adjustments, including a benefit of $6.5 million related to the portion of the interest on senior subordinated notes deductible for tax purposes for which a liability had been recorded, additional expense of $2.8 million (tax expense of $7.4 million offset by less depreciation expense and other adjustments) related to the US GAAP treatment of fixed asset basis under the Korea Asset Revaluation Law, and additional expense of $6.0 million associated with non-qualified stock option deductions which had been recorded as a reduction to income tax expense in prior periods, and additional expense of $1.0 million related to amended tax filings and reassessment of tax basis limitations.

The Revenue Recognition adjustment consisted of the deferral of shipments to one customer in 2004 for which the contract pricing was not fixed and determinable at the time of delivery and resulted in decreases of $1.1 million and $0.7 million to gross margin and net income, respectively, for the six month period.

Included in Other are primarily adjustments to cost of goods sold and inventory of approximately $2.4 million for profit not previously eliminated from inventory for product shipped between operations and other adjustments that are not individually significant.

Page 20

Net Sales.

Our net sales increased by 6.5% to $272.3 million in the second quarter of 2005 from $255.5 million in the second quarter of 2004. For the six months ended June 30, 2005, net sales increased by 8.0% to $523.2 million from $484.3 million for the six months ended June 30, 2004. In both periods, the sales increase was primarily due to higher sales volumes in polysilicon and wafer products. Year to year overall wafer average selling prices decreased 1.2% for the quarter and increased 1.0% for the six months.

We had deferred revenue totaling $7.6 million related to polysilicon sales as of June 30, 2005 with a corresponding deferred cost of $1.6 million. This revenue related to multiple element arrangements for polysilicon sales for which we received cash in the first half of 2005. We will not recognize the deferred revenue until all elements of the arrangement are satisfied. See “Critical Accounting Estimates – Revenue Recognition,” below.

Gross Margin.

In the 2005 second quarter, our gross margin was $89.3 million compared to $87.2 million in the 2004 second quarter. As a percentage of net sales, gross margin declined to 32.8% in the 2005 second quarter from 34.1% in the second quarter of 2004.

For the six months ended June 30, 2005, our gross margin was $170.6 million compared to $160.5 million for the six months ended June 30, 2004. As a percentage of net sales, gross margin declined to 32.6% in 2005 from 33.1% in 2004.

The improvement in gross margin dollars was primarily a result of the higher product volumes, especially 300 millimeter products, productivity improvements which lowered unit costs and increased sales and pricing on polysilicon.

Gross margin of $6.0 million, associated with the deferred revenue discussed above, was deferred as of June 30, 2005.

Additionally, in 2005 we changed our technology transfer process that isolated research and development (R&D) costs within manufacturing and reclassified them to R&D. See “Research and Development,” below. The change resulted in an increase in cost of goods sold with a corresponding decrease in R&D expense. The comparable costs recorded in the three and six months ended June 30, 2004 were $1.3 million and $2.6 million, respectively.

Marketing and Administration.

Marketing and administration expenses increased by $1.0 million to $18.8 million for the three months ended June 30, 2005 compared to $17.8 million for the three months ended June 30, 2004. As a percentage of net sales, marketing and administration expenses decreased to 6.9% in the 2005 second quarter from 7.0% in the 2004 period.

For the six months ended June 30, 2005, marketing and administration expenses increased $1.9 million to $36.9 million from $35.0 million for the six months ended June 30, 2004. As a percentage of net sales, marketing and administration decreased to 7.0% in the 2005 period from 7.2% for the 2004 period.

The increases were primarily a result of the increased freight on customer shipments related to the increase in large diameter product sales, higher tax-related professional fees and the increased cost of providing sample wafers to customers, partially offset by a one-time gain from a correction to the benefit obligation of a pension plan.

Research and Development.

Our R&D expenses decreased in the three months ended June 30, 2005 to $8.5 million compared to $9.3 million in the year ago period. As a percentage of net sales, R&D expenses decreased to 3.1% for the 2005 second quarter from 3.6% in the 2004 second quarter.

Page 21

For the six months ended June 30, 2005, research and development expenses decreased to $17.6 million from $18.2 million for the six months ended June 30, 2004. As a percentage of net sales, R&D decreased to 3.4% for the 2005 period from 3.8% for the 2004 period. We changed our technology transfer process that isolated R&D costs within manufacturing and reclassified them to R&D. We determined that the difficulty of precisely measuring the impact of these actual costs warranted no longer classifying such costs as R&D. The comparable costs recorded in the three and six months ended June 30, 2004 were $1.3 million and $2.6 million, respectively.

We received a contract with the Department of Defense in the second quarter of 2005 related to the development of thin film silicon on insulator wafers utilizing silicon layer transfer technology (SOI). The total contract value was $12.1 million, representing the proposed development costs expected to be incurred by the company during the nine month period from April 1 through December 31, 2005. The contract provides for the government to reimburse the company $3.5 million of the total costs to be incurred of $12.1 million and is recognized on a percentage completion basis. For the three and six months ended June 30, 2005, the company recognized $1.0 million as an offset of actual SOI costs incurred within research and development expenses. Other increased expenses were due to the efforts to increase our capability in the areas of flatness, particles and crystal defectivity.

Operating Income.

Operating income increased to $62.0 million, or 22.8% of sales, in the second quarter of 2005 compared to $60.0 million, or 23.5% of sales, in the 2004 second quarter.

For the six months ended June 30, 2005, operating income increased to $116.1 million, or 22.2% of sales, from $107.3 million, or 22.2% of sales, for the six months ended June 30, 2004.

The improved operating results were primarily a result of the increases in sales discussed above.

Nonoperating (Income) Expense.

Interest Expense.

In the three months ended June 30, 2005, interest expense decreased to $1.9 million, compared to $3.6 million for the three months ended June 30, 2004. For the six months ended June 30, 2005, interest expense decreased to $3.8 million from $6.9 million for the six months ended June 30, 2004. The decrease in interest expense was primarily the result of the redemption in December 2004 of the senior subordinated secured notes as well as the reduction of our South Korean debt throughout 2004.

Interest Income.

In the three months ended June 30, 2005, interest income decreased to $1.0 million, compared to $1.5 million for the three months ended June 30, 2004. For the six months ended June 30, 2005, interest income decreased to $1.7 million from $3.0 million for the six months ended June 30, 2004. The decrease in interest income was primarily the result of the liquidations of short-term investments in South Korea to fund the reduction of our South Korean debt throughout 2004.

Currency Losses.

Currency losses in the three months ended June 30, 2005 were $0.8 million, compared to $7.5 million in the comparable 2004 period. For the six months ended June 30, 2005, currency losses were $0.8 million, compared to $1.1 million for the year ago period.

Page 22

On July 1, 2004, we designated a Yen-based intercompany loan as a long-term investment with settlement not planned or anticipated in the foreseeable future. Since we no longer expect settlement of this intercompany loan, foreign currency gains and losses from this loan are no longer being recorded in the consolidated statement of operations. The $7.5 million currency loss in the three months ended June 30, 2004 was substantially a result of the revaluation of this Yen-based intercompany loan. The company had recorded a substantial gain in the three months ended March 31, 2004 resulting in the overall $1.1 million currency loss for the six months ended June 30, 2004.

Other, Net.

Our other nonoperating income remained consistent at $0.5 million in the three months ended June 30, 2005 and 2004. For the six months ended June 30, 2005, other nonoperating income decreased to $0.8 million from $2.4 million for the year ago period. This decrease was primarily a result of the recording of a $1.5 million gain in the first quarter of 2004 from a business interruption insurance recovery relating to a minor fire at Taisil in December 2003.

Income Taxes.

For the three months ended June 30, 2005, the company recorded a tax expense of $18.4 million as compared to a benefit of $12.6 million for the three months ended June 30, 2004. The expense recorded for the current quarter is reflective of a forecasted effective tax rate of 29% for 2005. The forecasted rate of 29% is exclusive of any discrete tax adjustments and without regard to future reversals of valuation allowances based on changes in judgment of projected future taxable income in the U.S. The rate is lower than the statutory rate primarily due to benefits derived from the company’s election to claim foreign tax credits, and the benefit associated with capturing other domestic tax credits.

For the six months ended June 30, 2005, the company recorded income tax expense of $14.5 million as compared to $0.9 million expense for the six months ended June 30, 2004. The expense is reflective of a forecasted rate of 29% for 2005, coupled with significant discrete tax adjustments impacting the tax provision in the first quarter. These included a tax benefit of $29.6 million due to a change in estimate of allowable depreciation deductions and the company’s election to credit foreign taxes. Prior period adjustments included a decrease in tax reserves related to the deductibility of TPG interest expense in the amount of $6.5 million, a tax expense of $6.0 million related to tax deductions for stock options exercised in prior years, a tax expense of $7.4 million related to the US GAAP treatment of fixed asset basis under the Korea Asset Revaluation Law, and a tax expense of $1.0 million for other adjustments related to amended return filings and a reassessment of the tax basis limited by the change in control provisions under IRC Section 382.

During the three months ended June 30, 2004, the company reversed $25.3 million in valuation allowances against deferred tax assets based on our belief that it was more likely than not that certain deferred tax assets would be realized based on management’s estimate of future earnings.

Liquidity and Capital Resources.

In the six months ended June 30, 2005, we generated $133.7 million of cash from operating activities, compared to $104.8 million in the six months ended June 30, 2004. This decrease despite improved operating results was a result of the increase in working capital discussed below.

Accounts receivable of $146.6 million at June 30, 2005 decreased $12.4 million from $159.0 million at December 31, 2004. The decrease was primarily attributable to the mix of customers. Days’ sales outstanding decreased to 49 days at June 30, 2005 compared to 54 days at December 31, 2004 based upon annualized sales for the respective immediately preceding quarter. This decrease in days sales outstanding was primarily attributable to the mix of customers. As discussed below, at June 30, 2005 and December 31, 2004, we had factored $52.1 million and $51.6 million of receivables, respectively, of which $17.3 million and $18.2 million have been recorded as short-term borrowings as of June 30, 2005 and December 31, 2004, respectively.

Our inventories increased $2.1 million to $129.7 million at June 30, 2005 from $127.6 million at December 31, 2004. Finished goods inventories increased primarily as a result of lower than forecasted shipments in the first half of 2005. Annualized inventory turns, calculated as the ratio of annualized respective quarterly cost of goods sold divided by the period-end inventory balance, increased to six for the three month period ended June 30, 2005 compared to five at December 31, 2004. At June 30, 2005, we had approximately $21.2 million of inventory held on consignment, compared to $22.2 million at December 31, 2004. Related inventory reserves for obsolescence, lower of cost or market issues or other impairments were $4.0 million at June 30, 2005 compared to $5.0 million at December 31, 2004.

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Our net deferred tax assets totaled $120.2 million as of June 30, 2005 versus $127.6 million as of December 31, 2004 (of which $7.5 million and $7.8 million was included in prepaids and other assets at June 30, 2005 and December 31, 2004, respectively). We provide for quarterly income taxes based on an estimated annual effective tax rate. We believe that it is more likely than not that, with our projections of future taxable income and after consideration of the valuation allowance, MEMC will generate sufficient taxable income to realize the benefits of the net deferred tax assets existing at June 30, 2005. As of June 30, 2005, we have approximately $68.9 million in valuation allowance reducing our gross deferred tax assets.

Our accounts payable decreased $19.1 million to $105.0 million at June 30, 2005, compared to $124.1 million at the end of 2004. The decrease was partially a result of the decrease in capital expenditure-related payables following the end of the 300 millimeter expansion in Japan and the purchase of SOI related equipment domestically.

Accrued liabilities decreased $13.6 million to $43.8 million at June 30, 2005, compared to $57.4 million at the end of 2004. The decrease was a result of a variety of items, including the payment of U.S. property taxes, the payment of insurance premiums and the adjustment of certain benefits liabilities.

We had deferred revenue totaling $7.6 million related to polysilicon sales as of June 30, 2005 with a corresponding deferred cost of $1.6 million. See “Net Sales,” above. We defer product revenue for multiple element arrangements based on a fair value per unit for the total arrangement when we receive cash in excess of fair value. We also defer revenue when pricing is not fixed and determinable or other revenue recognition criteria is not met. See “Critical Accounting Estimates – Revenue Recognition,” below.

Other noncurrent liabilities decreased $38.2 million to $34.2 million at June 30, 2005, compared to $72.4 million at the end of 2004. As discussed in Note 2 to the consolidated financial statements, in the three months ended March 31, 2005, the company reversed a portion of a contingent tax liability established in 2004 for the potential non-deductibility of a portion of a $67.7 million payment to an investor group led TPG in connection with the redemption of the company’s senior subordinated secured notes. After its review and based on its analysis, the company concluded that the interest portion, or $17.7 million, of the redemption payment should be deductible and we reversed a portion, or $6.5 million, of the contingent tax liability. In addition, $29.6 million of the contingent tax liability was reversed based upon a change in estimate and the company’s election to credit foreign taxes. Additional tax contingent liability of $0.3 million was recorded related to other strategies for which the company believes have been reported properly but are likely to be challenged by taxing authorities.

Our cash used in investing activities was $111.6 million for the six months ended June 30, 2005 compared to $113.6 million for the six months ended June 30, 2004. The 2004 period included the acquisition of the remaining interest in Taisil in the 2004 first quarter for $57.2 million, net of cash acquired. Capital expenditures increased $38.8 million to $110.6 million for the six months ended June 30, 2005 primarily related to increasing our capacity and capability for our next generation products, including 300 millimeter and silicon-on-insulator (SOI), by making incremental changes to our existing manufacturing facilities and manufacturing lines. The existing facilities may be modified to permit the manufacture of greater quantities of current products. Alternatively, with incremental improvements, the existing facilities may be modified to become capable of manufacturing next generation products.

Cash used in financing activities was $10.0 million in the six months ended June 30, 2005 versus cash provided by financing activities of $26.0 million in the six months ended June 30, 2004. The change in cash from financing activities was primarily related to borrowing in 2004 of $60.0 million on our Citibank/UBS credit facility to fund the acquisition of the remaining interest in Taisil in the 2004 first quarter and the net payments on short-term borrowings and long-term debt of $5.6 million in 2005 compared to $31.7 million in 2004.

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Our short-term borrowings were approximately $21.2 million at June 30, 2005, under approximately $100.6 million of short-term loan agreements. Of the $100.6 million committed short-term loan agreements, $3.3 million is unavailable as it relates to the issuance of third party letters of credit. Long-term borrowings outstanding were $128.4 million at June 30, 2005, under $307.4 million of committed long-term loan agreements. Of the $307.4 million committed long-term loan agreements at June 30, 2005, $4.3 million was unavailable as it related to the issuance of third party letters of credit. Our weighted average cost of borrowing was 3.4% at June 30, 2005 and 2.7% at December 31, 2004. Our total debt to capital ratio was 21% at June 30, 2005 compared to 25% at December 31, 2004.

We and certain of our foreign subsidiaries have entered into agreements with various financial institutions whereby we sell on a continuous basis eligible trade accounts receivable. Each of the agreements has clauses covering sales of receivables with recourse and non-recourse. All of the receivables are sold on a recourse basis. These agreements have different terms, including options for renewal, none of which extend beyond one year. Such factoring is generally limited to $90 million by our revolving credit agreement. At June 30, 2005 and December 31, 2004, we had factored $52.1 million and $51.6 million of receivables, respectively, of which $17.3 million and $18.2 million have been recorded as short-term borrowings as of June 30, 2005 and December 31, 2004, respectively, as the sale criteria under SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” were not met for certain factored transactions.

We believe that we have the financial resources needed to meet business requirements for the next 12 months, including capital expenditures and working capital requirements.

Subsequent Developments.

On July 21, 2005, after the close of the second quarter, the company entered into a Revolving Credit Agreement with National City Bank of the Midwest (“National City Bank”), US Bank National Association, and such other lending institutions as may from time to time become lenders (the “National City Agreement”). The National City Agreement provides for a $200 million secured revolving credit facility and replaces the $150 million revolving credit facility from Citibank/UBS (the “Citibank Facility”) and the $35 million revolving credit facility from TPG and certain of its affiliates (the “TPG Facility”).

The National City Agreement has a term of five years. Interest on borrowings under the National City Agreement will be payable based on the company’s election at LIBOR plus an applicable margin (currently 1.0%) or at a defined prime rate plus an applicable margin (currently 0.00%). The National City Agreement also provides for the company to pay various fees, including a commitment fee, on the unused portion of the lenders’ commitments (such fee is currently set at 0.25% per annum). The National City Agreement contains covenants typical for credit arrangements of comparable size, such as minimum earnings before interest, taxes, depreciation and amortization and an interest coverage ratio.

On July 21, 2005 we borrowed an aggregate of $60 million under the National City Agreement and used those funds to repay all outstanding amounts under the Citibank Facility; interest on this $60 million loan is due quarterly beginning October 1, 2005. The proceeds of subsequent borrowings under the National City Agreement will be used for working capital needs and to finance capital expenditures.

The obligations of the company under the National City Agreement are guaranteed by certain subsidiaries of the company. The obligations of the company and the guaranty obligations of the subsidiaries are secured by a pledge of the capital stock of certain domestic and foreign subsidiaries of the company. The other assets of the company are not pledged as security for the National City Agreement as they were under the Citibank Facility and the TPG Facility.

In connection with the execution of the National City Agreement, we terminated the Citibank Facility upon the repayment by the company of all amounts then outstanding. In addition, the company terminated the TPG Facility and the reimbursement agreement among the company and certain TPG entities. Those TPG entities had guaranteed the company’s obligations under the Citibank Facility and the TPG Facility and in return, the company had entered into a reimbursement agreement with those guarantors under which the company agreed to reimburse them for any payment made under the guaranties.

On July 21, 2005, all of the liens and security interests of Citibank, UBS and the other lenders under the Citibank Facility and the TPG entities under the TPG Facility on and in our assets were released, as were the subsidiaries’ guarantees of MEMC’s repayment obligations.

The extinguishment of the Citibank Facilities and the TPG Facility will result in the write-off of approximately $1.9 million of deferred financing fees. This loss will be recorded in nonoperating expenses for the three months ended September 30, 2005.

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Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related footnotes. In preparing these financial statements, management has made its best estimates of certain amounts included in the financial statements. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. MEMC’s significant accounting policies are more fully discussed in Exhibit 13 to our annual report on Form 10-K for the fiscal year ended December 31, 2004.

Revenue Recognition

We record revenue for product sales when title transfers, the risks and rewards of ownership have been transferred to the customer, the fee is fixed and determinable and collection of the related receivable is reasonably assured, which is generally at the time of shipment for non-consignment orders. In the case of consignment orders, we recognize revenue based upon customer usage, defined as when the customer pulls the product from consignment inventory. Our wafers are generally made to customer specifications and we conduct rigorous quality control and testing procedures to ensure that the finished wafers meet the customer’s specifications before the product is shipped. We consider international shipping term definitions in our determination of when title passes. We defer revenue for multiple element arrangements based on a fair value per unit for the total arrangement when we receive cash in excess of fair value. We also defer revenue when pricing is not fixed and determinable or other revenue recognition criteria is not met.

Inventory

Inventories, which consist of materials, labor and manufacturing overhead, are valued at the lower of cost or market. Inventory costs are based on a weighted average actual cost.

Property, Plant and Equipment

We depreciate our land improvements, building and building improvements, and machinery and equipment evenly over the assets’ estimated useful lives. Changes in circumstances such as technological advances, changes in our business model, or changes in our capital strategy could result in the actual useful lives differing from our estimates. In those cases where we determine that the useful life of property, plant and equipment should be shortened or lengthened, we depreciate the net book value over its remaining useful life.

Income Taxes

In determining taxable income for financial statement reporting purposes, we must make certain estimates and judgments. These estimates and judgments are applied in the calculation of certain tax liabilities and in the determination of the recoverability of deferred tax assets, which arise from temporary differences between the recognition of assets and liabilities for tax and financial statement reporting purposes. We regularly review our deferred tax assets for realizability and adjust the valuation allowance based upon our judgment as to whether it is more likely than not that some items recorded as deferred tax assets will be realized, taking into consideration all available evidence, both positive and negative, including historical pre-tax and taxable income (losses), projected future pre-tax and taxable income (losses) and the expected timing of the reversals of existing temporary differences. In arriving at these judgments, the weight given to the potential effect of all positive and negative evidence is commensurate with the extent to which it can be objectively verified.

We repatriate all or substantially all of our portion of the current year earnings of the Company’s South Korean subsidiary to the United States. We do not provide for U.S. income taxes on the remaining undistributed earnings of our foreign subsidiaries which would be payable if the undistributed earnings were distributed to the U.S., as we expect to reinvest these earnings overseas permanently.

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The company is subject to income taxes in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. The company is subject to tax audits in these jurisdictions from time to time. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the company believes that its tax liabilities reflect the probable outcome of known contingencies.

Employee-related Liabilities

We have a long-term liability for our defined benefit pension plans. Our pension obligation is funded in accordance with provisions of federal law.

Our pension liability is actuarially determined, and we use various actuarial assumptions, including the discount rate, rate of salary increase, and expected return on assets, to estimate our costs and obligations. If our assumptions do not materialize as expected, expenditures and costs that we incur could differ from our current estimates.

Stock-based Compensation

We account for our stock-based compensation under Accounting Principles Board Opinion No. 25 (Opinion 25), “Accounting for Stock Issued to Employees”, and related interpretations. We record compensation expense related to restricted stock units awards over the vesting periods of the awards and reflect the unearned portion of deferred compensation as a separate component of stockholders’ equity.

Compensation expense equal to the intrinsic value of the options has been recognized over the vesting periods for options granted at a price below the market price on the date of the grant and deferred compensation has been recorded for the unearned portion of the options as a separate component of stockholders’ equity.

Recently Issued Accounting Pronouncements

In May 2004, the FASB issued FSP No. 106-2 (“FSP 106-2”), “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003”. See discussion in 11 of Notes to Consolidated Financial Statements herein.

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs—An Amendment of ARB No. 43, Chapter 4” (“SFAS 151”). SFAS 151 amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Among other provisions, the new rule requires that items such as idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal” as stated in ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005 and is required to be adopted by us in the first quarter of 2006, beginning on January 1, 2006. We do not expect SFAS 151 will have a material impact on our consolidated results of operations and financial condition.

In December 2004, FASB issued FASB Staff Position (“FSP”) No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP 109-2”), provides guidance under FASB Statement No. 109, “Accounting for Income Taxes,” with respect to recording the potential impact of the repatriation provisions of the American Jobs Creation Act of 2004 (the “Jobs Act”) on enterprises’ income tax expense and deferred tax liability. The Jobs Act was enacted on October 22, 2004. FSP 109-2 states that an enterprise is allowed time beyond the financial reporting period of enactment to evaluate the effect of the Jobs Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying FASB Statement No. 109. MEMC did not repatriate funds under the provisions of the Jobs Act. Accordingly, we have not adjusted our tax expense or deferred tax liability to reflect a deduction related to the Jobs Act.

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS 123) and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123R

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requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values, beginning in our fiscal year ending December 31, 2006. The pro forma disclosures previously permitted under SFAS 123 no longer will be an alternative to financial statement recognition. Under SFAS 123R, we must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. We will use the modified prospective method of adoption which requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS 123R. MEMC expects that the adoption of SFAS 123R will have an estimated negative $0.04 to $0.05 impact on diluted earnings per share for the year ending December 31, 2006.

In March 2005, the FASB issued FIN 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143” (“FIN 47”), which requires an entity to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability’s fair value can be reasonably estimated. FIN 47 is effective in 2005 for MEMC. MEMC has determined that the adoption of FIN 47 did not have a material impact on its consolidated results of operations and financial condition.

In May 2005, the FASB issued Statement of Financial Accounting Standard No. 154, “Accounting Changes and Error Corrections” (“SFAS 154”) which replaces Accounting Principles Board Opinions No. 20 “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements—An Amendment of APB Opinion No. 28.” SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application, or the latest practicable date, as the required method for reporting a change in accounting principle and the reporting of a correction of an error. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 and is required to be adopted by MEMC in the first quarter of 2006. MEMC has determined that the adoption of SFAS 154 will not have a material impact on its consolidated results of operations and financial condition.

Cautionary Statement Regarding Forward-Looking Statements

This Form 10-Q contains “forward-looking” statements within the meaning of the Securities Litigation Reform Act of 1995, including those concerning our expectation that we may need to adjust our valuation allowances during the remaining six months of 2005 if financial results continue to improve; our expectation that we will generate sufficient taxable income to realize the benefits of net deferred tax assets existing as of June 30, 2005 our belief that we have the financial resources needed to meet business requirements for the next twelve months including capital expenditure and working capital requirements; our expectation that the adoption of SFAS 123R will have an estimated negative impact on diluted earnings per share of $0.04 to $0.05 for the year ending December 31, 2006; and our belief that the implementation of SFAS 151, 154 and FIN 47 will not have a material effect on our financial condition or results of operations. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include such factors as: market demand for wafers and semiconductors; customer acceptance of our new products; utilization of manufacturing capacity; our ability to reduce manufacturing and operating costs; inventory levels of

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our customers; changes in the pricing environment; general economic conditions; the accuracy of our assumptions regarding future book and taxable income; actions by our competitors, customers and suppliers; the impact of competitive products and technologies; technological changes; changes in product specifications and manufacturing processes; changes in financial market conditions; changes in interest and currency exchange rates; changes in the composition of worldwide taxable income; our ability to obtain commitments from lenders and close the new line of credit on the terms set forth in the engagement letter; the accuracy of our assumptions regarding the impact of the adoption of SFAS 123R on our consolidated results of operations and earnings per share; and other risks described in MEMC’s filing with the Securities and Exchange Commission, including MEMC’s annual report on Form 10-K for the year ended December 31, 2004.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

In the preparation and filing of this Form 10-Q/A, we carried out an evaluation as of June 30, 2005, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of that date. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control Over Financial Reporting

During the three months ended June 30, 2005, the company implemented the following actions to improve internal control over financial reporting:

• The company’s Taiwan manufacturing facility completed conversion to the company’s standard accounting and financial reporting computer system. All company facilities now utilize the same enterprise-wide computer system for accounting and financial reporting.

Except as discussed above, there were no changes in our internal control over financial reporting that occurred during the second quarter of 2005 that have materially affected or are reasonably likely to materially affect the company’s internal control over financial reporting.

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PART II -- OTHER INFORMATION

Item 6. Exhibits.

Exhibit Number	Description
2-a	Restructuring Agreement between TPG Wafer Holdings LLC and the Company, dated as of November 13, 2001 (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K dated November 28, 2001)
2-b	Merger Agreement between TPG Wafer Holdings LLC and the Company, dated as of November 13, 2001 (incorporated by reference to Exhibit 2.2 of the Company’s Current Report on Form 8-K dated November 28, 2001)
3-(i)	Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3-a of the Company’s Form 10-Q for the Quarter ended June 30, 1995)
3-(i)(a)	Certificate of Amendment of Restated Certificate of Incorporation of the Company as filed with the Secretary of State of the State of Delaware on June 2, 2000 (incorporated by reference to Exhibit 3-(i)(a) of the Company’s Form 10-Q for the Quarter ended June 30, 2000)
3-(i)(b)	Certificate of Amendment of Restated Certificate of Incorporation of the Company as filed with the Secretary of State of the State of Delaware on July 10, 2002 (incorporated by reference to Exhibit 3-(i)(b) of the Company’s Form 10-Q for the Quarter ended September 30, 2002)
3-(ii)	Restated By-laws of the Company (incorporated by reference to Exhibit 3-(ii) of the Company’s Form 10-Q for the Quarter ended March 31, 2004)
4-b	Form of Warrant Certificate (incorporated by reference to Exhibit 4.6 of the Company’s Current Report on Form 8-K dated November 28, 2001)
31.1	Certification by the Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by the Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification by the Chief Executive Officer and the Chief Financial Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MEMC Electronic Materials, Inc.
	/S/    KENNETH H. HANNAH
August 10, 2006	Name:	Kenneth H. Hannah
	Title:	Senior Vice President and Chief Financial Officer (on behalf of the registrant and as principal financial and accounting officer)

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EXHIBIT INDEX

The exhibits below are numbered in accordance with the Exhibit Table of Item 601of Regulation S-K.

Number Exhibit	Description
31.1	Certification by the Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by the Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification by the Chief Executive Officer and the Chief Financial Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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